LNG tanker risk

Jun 10, 2004
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The decision was recently taken to roughly quadruple the capacity of the Liquified Natural Gas terminal and storage facility at the Isle of Grain on the south coast of the Thames Estuary, England. It is expected that 12% of all UK natural gas consumption will be supplied from overseas through this one site. If you do the sums, it means at least one large LNG tanker per day must discharge to sustain supply.

Hmmm. Now let us consider what this means. The Thames Estuary gives into the northern end of the busiest seaway in the world, the English Channel. The question is, will this endless stream of floating bombs come up from the south through these busy sea lanes, or down from the north, out of slightly quieter waters? Does anyone know?

I feel pretty sure these ships will come up from the south, since the gas will be coming up from Libya and Algeria (thus these ships will have to negotiate the Straits of Gibralter as well).

Now maybe my thinking is failing me somewhere, but does this make sense? However well these ships are guided, over time they will rack up the risk simply due to the relentless nature of the operation. Each of these ships can carry 40,000 tonnes of LNG - the consequences of such a vessel suffering a breach in a collision just don't bear thinking about. It's the chemical equivalent of a nuclear weapon. An explosion of that scale in the English Channel could take out crowded car ferries and any oil tankers nearby, plus blast damage to properties along the coasts.

Is this a sensible thing to do? I think not. Just by improving building insulation they could have reduced future gas use by 12%, a rather safer option than LNG imports. The political motive will be the attempt to diversify UK fuel supplies at a time when domestic gas (and oil) production is in decline. There is not the political courage to pursue conservation measures. Yet I have heard no objection to the plans based on the risk.

Has anyone picked up bad vibes about this amongst professional seamen?
 
Dec 2, 2000
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>>Is this a sensible thing to do? I think not.<<

Is there really a choice? You can't eliminate risk no matter how hard you try, and unless one has energy sources closer to home, I would say probably not. Even with the most stringent conservation measures, the only direction demand will tend to go in is up. You could probably slow it down but I don't think it can be stopped.

It's well and good to be cautious. Quite understandable as a matter of fact, but it might be a good idea to come up with an alternative plan that can be shown to work befor pitching this one in the dustbin.

>>Has anyone picked up bad vibes about this amongst professional seamen?<<

I don't think you'll find any professional seamen that are comfortable around LNG tankers. I've seen plenty of them in the Straits of Malacca and everybody gives them the widest possible berth. In all fairness however, the Straits are, if anything far more congested then the area around the British Isles, have far less room to manuever, and these ships have been operating there safely for decades.
 
Jun 10, 2004
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I take your points, Michael. In this case, the level of traffic will be four times what it is at the moment, and implies at least one very large LNG tanker berthing per day, 365 days per year.

What bothers me about LNG is that it is a poor balance of risk versus chemical energy transported. An LNG tanker carries far less energy than any respectable tanker, but the potential consequences of a collision are immeasurably more serious than any but the most exotic tanker disaster. From an engineering viewpoint, I don't think they have a lot of justification. Their existence - in rapidly increasing numbers - appears to be motivated by political pressures to diversify energy supplies. It is not essential for Britain to import LNG, we could connect to the gas pipeline network that already feeds Western Europe, or we could probably make the stuff from coal as we did before North Sea gas. LNG's contribution to the energy input of any nation is never material.

It just seems to me that the risk of a calamity at sea is being racked up due to politically expedient decisions that are (probably) not getting the technical scrutiny they deserve as regards the risk-benefit balance.

Not that there is anything new in that! I was curious as to what professional seamen on Titanica would say. But there does not seem to be too much interest, so I guess it is less of an issue that I thought it was.
 
Dec 2, 2000
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>>But there does not seem to be too much interest, so I guess it is less of an issue that I thought it was.<<

Don't be so sure. LNG tankers have been operated for a very long time and thankfully with very few accidents. Mariners are very wel aware of the dangers and safety is taken very seriously on these ships. Unfortunately, risk can never ever be eliminated. It can be managed and needs to be, but you can't stop doing things just because of that. Life goes on.

>>LNG's contribution to the energy input of any nation is never material.<<

Got some statistics to back that up? LNG may not be that important now but with recoverable oil reserves declining, you can bet that it will become more important. At least until somebody comes along with something better which can be shown to work rather then the usual panaceas that actually take more energy to produce then is delivered.
 
Jun 10, 2004
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Michael, should you be interested, I looked up energy consumption by fuel in Britain. I am surprised to find that gas consumption is almost as much as petroluem consumption. All the same, LNG makes up much less than 1% of energy consumption in Britain at present. Even after the Isle of Grain expansion it will be only about 6Bn tonnes of oil equivalent (BTOE) out of total consumption of 160 BTOE (all fuels including hydro and nuclear).

I suppose what I am getting at is that this appears to be an unnecessary risk, since the energy contribution from LNG is very modest and could be achieved in other ways, like a pipeline under the English Channel.
 
Dec 2, 2000
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>>I suppose what I am getting at is that this appears to be an unnecessary risk, since the energy contribution from LNG is very modest and could be achieved in other ways, like a pipeline under the English Channel.<<

That pipeline would carry it's own share of risks as well, and would be damned difficult to repair if something went wrong. Still, that in itself is not a really good reason not to give it a try. While LNG may not be making a signifigent contribution in the present, that doesn't really speak to future trends in the market. When oil becomes more scarce or more expensive for whatever reason, people are going to start looking for alternatives. Whichever way works best, it's important to build the infrastructure now.
 
Dec 2, 2000
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From The International Harald Tribune:

Samsun to start building giant LNG tanker
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SINGAPORE: Samsung Heavy Industries, the world's second-largest shipyard, will start Wednesday to build the world's biggest liquefied natural gas carrier for an Exxon Mobil project in Qatar.

Samsung will cut steel for a 266,000 cubic-meter, or 347,915 cubic yard, LNG tanker, about twice the size of a typical LNG carrier, in Koje island in South Korea and deliver the vessel by August 2008, said Robert Tustin, technical manager for new construction at Lloyd's Register Asia. His firm inspects and certifies ships.
Story at http://www.iht.com/articles/2007/04/03/bloomberg/sxtanker.php

Comment: Looks like the LNG market is becoming a lot more signifigent. If it wasn't, nobody would even consider building LNG tankers this big. Keep an eye open for future trends.
 
Dec 2, 2000
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Dec 2, 2000
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From Energy Current:

New Jersey receives adjacent coastal status
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USA: Maritime Administrator Sean T. Connaughton designated New Jersey as an Adjacent Coastal State for the proposed Safe Harbor Energy liquefied natural gas (LNG) project after receiving a recommendation from the National Oceanic and Atmospheric Administration to do so. Pursuant to the requirements set forth at Section 1508(b) of the Deepwater Port Act of 1974, Connaughton told New Jersey Gov. Jon S. Corzine that a license for the project cannot be issued without Corzine's approval.
Story at http://www.energycurrent.com/index.php?id=3&storyid=6574

Comment: So will they or won't they build the facility?
 
Dec 2, 2000
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From The Hellenic Shipping News:

First LNG cargo in Q-Flex tanker for Japan
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Tohoku Electric Power will receive the first liquefied natural gas cargo transported on a Q-Flex tanker, the world's biggest class, in late December as producers seek to cut costs and transport larger volumes. The cargo will arrive at Higashi Niigata terminal in northern Japan from Qatar, Tohoku's spokesman Kotaro Kudo said on Monday.
For the rest, go to http://www.hellenicshippingnews.com/index.php?mod=article&cat=nwsinternational&article=5438
 
Dec 2, 2000
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From The Hellenic Shipping News:

LNG carrier surplus may hit tanker rates in next 2 yrs
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Shipping rates may decline in the next two years as the number of tankers available to carry liquefied natural gas may surge by about 46 per cent while supplies of the fuel get delayed.
The number of LNG tankers may increase to more than 360 by 2010 from 246, PVM Oil Associates GmbH said in a report emailed to Bloomberg yesterday. Global LNG trade may climb by 6 per cent a year by 2010, while LNG shipping capacity may grow at about 15 per cent, the Vienna-based consultant said.
Full story at http://www.hellenicshippingnews.com/index.php?mod=article&cat=Energynews&article=5612

And on the other hand:

Global LNG Production to Fall Short, Boosting Prices
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Global liquefied natural gas supply may rise less than expected until 2015 because of higher project costs, worsening shortages and boosting prices, UBS AG said.
LNG production may rise by 9 percent a year through 2015, compared with the ``consensus'' estimate of about 10 percent, UBS said in a Dec. 3 report.
Story at http://www.hellenicshippingnews.com/index.php?mod=article&cat=Energynews&article=5613

Comment: A surplus of shipping drops the rates and the price down, a shortage of the product itself drives them right back up again. In sum, a remarkable sequence of cause and effect. Ain't economics wonderful?
 
Dec 2, 2000
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From The Hellenic Shipping News:

LNG's Prognosis
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Liquefied natural gas could overflow with prosperity. But, real risks are present.
Stranded gas found in pockets around the world can be frozen, transported and then re-gasified in areas where natural gas shortfalls persist. Right now, that LNG provides about 2.8 percent of this nation's natural gas, a figure that the U.S. Department of Energy is predicting to increase to 16 percent by 2030.
"LNG allows the United States to meet the growing demand for natural gas in an environmentally sound and safe way," says Bill Cooper, executive director of the Center for LNG in Washington, D.C. "We currently produce 83 percent of our natural gas, domestically. We import between 12 percent and 14 percent from Canada, whose contributions will only fall. Demand will only rise and we have to fill the gap."
For more of this lengthy story, go to http://www.hellenicshippingnews.com/index.php?mod=article&cat=Energynews&article=5817

Comment: Risky or not, the market is booming and looks set to grow.
 
Dec 2, 2000
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From The Shipping Times:

77000 ton LNG Carrier delivered to K Line LNG Shipping UK
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Kawasaki Kisen Kaisha, Ltd. ("K" Line) today announced the successful delivery of its brand new 145,000m3 Liquefied Natural Gas (LNG) Carrier "CELESTINE RIVER", constructed at Kawasaki Shipbuilding Corporation’s Sakaide Shipyard in Kagawa, Japan.
Story at http://www.shippingtimes.co.uk/itm128_kline-uk.htm
 
Dec 2, 2000
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From The Hellenic Shipping News:

Annual LNG Shipping Market Review and Forecast 2007/08
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This reports an average growth in LNG demand of 7.7% over the last decade with 2006 well above average at 11.8% to 211.1bcm. The focus has certainly shifted of late away from SE Asia-Far East and North Africa-Europe areas to new supply sources in the Middle East, West Africa and Caribbean. Japan and South Korea have both recently been sourcing cargoes from Africa and Trinidad. Following something of a slump, USA imports of LNG were restored to record levels during March and April of this year. Meantime, LNG demand remains strong in the booming markets with India and China receiving their first imports.
Story at http://www.hellenicshippingnews.com/index.php?mod=article&cat=Energynews&article=6685

Comment: Risky or not, this is a huge market and looks set to grow. The article notes that 27 new ships were delivered in 2006 with 14 new deliveries in the first half of 2007.
 
Dec 2, 2000
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From CBS News:

Report: Oil, LNG Tankers Vulnerable
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(AP) The Coast Guard lacks the resources to adequately protect tankers carrying liquefied petroleum or crude oil from a possible terrorist attack, congressional auditors reported Wednesday.

The report by the Government Accountability Office said the Coast Guard is stretched too thin in some cases "to meet its own self-imposed security standards such as escorting ships carrying liquefied natural gas."

Also, said the report, some ports visited by the government auditors did not have the resources needed to promptly respond to a terrorist attack on a crude oil or LNG tanker, including a shortage of fire boats and inadequately trained people.
For the rest, go to http://www.cbsnews.com/stories/2008/01/09/ap/government/main3694546.shtml

Comment: Doesn't this just give you the warm and fuzzies?
 
Dec 2, 2000
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Dec 2, 2000
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From The American Shipper:

Connecticut Gov. Rell opposes LNG terminal
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Connecticut Gov. M. Jodi Rell has expressed her opposition to the proposed Broadwater liquefied natural gas terminal in the middle of Long Island Sound, and is asking New York Gov. Eliot Spitzer to have New York agencies reviewing the plan "consider the potential disastrous environmental impacts."
For the rest, see http://www.americanshipper.com/SNW_story.asp?news=82194
 
Dec 2, 2000
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From The Hellenic Shipping News:

Middle East and the Future of LNG Market
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The Role of Middle East as LNG exporter is expected to rise in future due to its huge natural gas reserves, underlines the latest market research by consultants company RNCOS under the title ''Global LNG Market - The Road Ahead''.
''The role of Middle East as a LNG supplier is gaining importance, largely due to its huge potential gas reserves. With this trend, it is expected that LNG trade will shift towards Middle East in future. LNG markets of US and Europe are expected to grow at faster pace than Asia-Pacific market.
For the rest, see http://www.hellenicshippingnews.com/index.php?mod=article&cat=Energynews&article=7855
 
Dec 2, 2000
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From The Hellenic Shipping News:

Shell to Recruit U.S. Seafarers for International LNG Fleet for the First Time
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Shell International Trading and Shipping Company Ltd. (SHELL) announced it will begin recruiting U.S. seafarers for the company's growing portfolio of managed international liquefied natural gas (LNG) vessels. One of the first major oil producers to actively recruit U.S. seafarers for LNG vessels, Shell is committed to securing the most qualified seafarers for its maritime fleet operations and the United States offers an exceptional skill pool, particularly for LNG vessels.
For the rest, see http://www.hellenicshippingnews.com/index.php?mod=article&cat=nwsinternational&article=8805
 
Dec 2, 2000
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From RasGas:

RasGas adds seven new Nakilat ships to its’ expanding LNG fleet
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As the liquefied natural gas (LNG) market continues to expand at a phenomenal rate, RasGas Company Limited (RasGas), the Qatar based premium LNG exporter, continues to grow its fleet to meet global demand. This week, RasGas, Teekay Nakilat and J5 name seven Q-Flex LNG carriers that will enter long-term RasGas charters in ceremonies at both the Samsung Heavy Industries (SHI) and Daewoo Shipbuilding and Marine Engineering (DSME) shipyards in South Korea. These ships bring the RasGas LNG fleet to a total 20 ships ranging from 138,000 cu.m through to 217,000 cu.m.
For the rest, see http://www.rasgas.com/news_details.cfm?news_id=197